MONTREAL, Sept. 28 /PRNewswire/ -- Quebec's biotechnology industry is still primarily made up of small companies whose cash balance remains weak overall for many of them. A slight improvement in the situation can however be observed relative to last year, despite the context which has remained difficult on the whole in the biotechnology industry.
These are the initial conclusions that can be drawn from a survey conducted by BIOQuebec and released yesterday within the framework of the first ever National Biotechnology Week. For a second consecutive year, BIOQuebec is sharing its survey findings with Quebec's biotechnology companies.
The President of the association, Dr. Luc Vachon, underscores the most disturbing aspect of the survey which reveals that 40.4% of the companies in the industry have an insufficient cash balance to ensure independent operations over the next 12 months. "This piece of information is worrisome, when one takes into account the lengthy development cycle for drugs and when one is aware that several projects are presently at a very advanced stage of development. By comparison, only 15% of American companies are in this situation. One positive element to be kept in mind, however, is that the situation in the Province of Quebec appears to be improving slightly, given that last year, 51% of the companies surveyed indicated that they had an insufficient cash balance for the ensuing year of operations. A 10.6% improvement over last year. In addition, a majority of the companies expect to be in a hiring mode in 2005."
In the area of investments, 2003 witnessed some sixty companies closing financing deals, while 2004 looks more promising seeing that a little more than 30 investments were completed as of the end of the second quarter, totalling $238 million in private and public placements, compared to $207 million in 2003 over the same period (two quarters). The survey also reveals that 60% of the companies questioned are looking for over $10 million in financing.
"The situation remains difficult nonetheless, given the 23% decline in the TSX biotech index since the beginning of the year, it is riskier to interest investors in the possibility of short-term growth", declared Perry Niro, Executive Director of BIOQuebec.
The movement to streamline operations continues in the Province of Quebec. Certain companies have been bought out or involved in a merger in 2003. Indeed, the withdrawal of certain investors from the "start-up" niche (in which there is a significant number of companies that are in the pre- clinical phase) affects nearly 35% of the Quebec companies that have been unsuccessful in securing financing.
The survey findings also indicate that the clinical portfolio of many companies is currently not extensively developed, which would explain why only 29% of the companies have established an alliance with a pharmaceutical company. "In the majority of cases, it will take between three and five years before a clinical product reaches the marketing phase in the Province of Quebec. The challenge is to ensure financing for the research projects of these companies during this period, in addition to persuading the major pharmaceutical groups to consider our companies as research partners", indicated Dr. Luc Vachon, the President of BIOQuebec.
The survey amply demonstrates the importance of pharmaceutical alliances, since the Quebec companies that do have such business ties also boast a more solid financial foundation and a technological value that favours investment. "BIOQuebec plans to pursue its work to foster partnership agreements, notably by means of its BIOMEDEX event and through the organization of training workshops on negotiations for our business executives", indicated M. Niro, the Executive Director of BIOQuebec.
"It's unfortunate that Quebec biotechnology companies spend a significant amount of their time looking for financing instead of investing their energy and talents in developing their projects. In addition, the survey reveals the existence of a greater number of phase II and III projects, in other words, projects that are at a more advanced level. This is not the time to give up. As has been noted in the past, one of the potential keys to success remains the creation of a public-private investment fund. We invite the various levels of government to pursue the dialogue begun in 2004 and to continue their involvement as one of the catalysts contributing to the growth of our industry", concluded Dr. Luc Vachon.
BIOQuebec's survey of the life science industry in the Province of Quebec was conducted from May 31 to June 16, 2004. A sample of 103 Quebec biotechnology companies were contacted and 59 companies responded to the survey. When the survey was being designed, the association had set a target of 53 participants in order to attain a 95% confidence level with a 10% margin of error. In addition, a comparison between the current survey and the one done in the fall 2003 was carried out with a sample of 26 companies that participated in both studies. Of the group, seven companies that participated last year are no longer operating today, as they were involved in mergers, acquisitions, or else they simply ceased operations.
National Biotechnology Week
National Biotechnology Week is an initiative of BIOQuebec and BIOTECanada and will be held from September 27 to October 1, 2004. It seeks to raise awareness regarding the economic, social and medical benefits of biotechnology, in Canada. The Week will consist of numerous activities and forums, and various announcements will be made all across Canada. Visit http://www.imagenenation.ca/ for more complete information on the programmes and activities being offered by BIOQuebec.
With more than 240 research organization and corporate members, BIOQuebec is the leading bio-industry and life science network in Canada. Its mission is to foster the industry's development.
For more details, or to obtain the entire survey conducted by BIOQuebec, please visit the Web site http://www.bioquebec.com/ .